Wednesday, August 14, 2013

The U.S. Court of Appeals for the Fourth Circuit recently affirmed (in any unpublished opinion) a $1 million judgment obtained by the State of Maryland for violations of the identity disclosure provisions of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. §227, et seq., applicable to artificial or prerecorded voice telephone messages.

In so ruling, the Fourth Circuit held that the TCPA empowers state attorney generals to bring an action against "any person" who violates the identity disclosure provision, including individuals using autodialing systems, not just the autodialing services themselves.

Prior to the 2010 Maryland gubernatorial election, a political candidate hired Appellants to assist with his campaign efforts. As part of the campaign, Appellants' employee composed and prepared a pre-recorded telephone call, also known as a robocall. The robocall neither identified the campaign as the sponsor nor included the campaign's phone number.

The robocall, along with two lists containing phone numbers for Maryland voters affiliated with the opposing party, were subsequently uploaded to an automatic dialing service ("Autodialer"). On election night, the Autodialer sent the robocall to more than 112,000 Maryland voters. Subsequently, the State of Maryland filed a civil lawsuit in federal court against Appellants and their employee for violations of the TCPA.

Appellants filed a motion to dismiss, challenging among other things the TCPA's constitutionality as applied to political calls, and a motion to stay pending the resolution of related state criminal investigations. The federal district court located in Maryland denied both motions.

The district court eventually entered judgment on behalf of the State. The court explained that the record unambiguously supported a finding that Appellants had violated the TCPA and that Appellants and their employee may be held jointly and severally liable for any damages. Judgment was entered against the employee in the amount of $10,000 and against Appellants in the amount of $1,000,000.

As you may recall, the TCPA's identity disclosure provision and its implementing regulation generally require all artificial or prerecorded voice telephone messages to identify the entity responsible for initiating the call and provide that entity's telephone number. 47 U.S.C. §227(d)(1), (3)(A); 47 C.F.R. §64.1200(b).

On appeal, Appellants raised four issues. First, Appellants asserted that the TCPA was unconstitutional as applied to political robocalls. The Fourth Circuit disagreed.

"[R]egulations that are unrelated to the content of speech are subject to an intermediate level of scrutiny…" Turner Broad. Sys., Inc. v. F.C.C., 512 U.S. 622, 642 (1994). Content-neutral laws are valid so long as they further an important governmental interest. See United States v. O'Brien, 391 U.S. 367, 377 (1968). Here, the Fourth Circuit held that the TCPA's identity disclosure provision was a content-neutral law. Further, it identified three important governmental interests furthered by the TCPA: (i) protecting residential privacy; (ii) promoting disclosure to avoid misleading recipients of recorded calls; and (iii) promoting effective law enforcement.

Second, Appellants argued that the lower court improperly denied their motion to dismiss, reiterating several issues raised below. Rejecting all such arguments, the Fourth Circuit affirmed the district court's denial.

Among other issues, Appellants argued that the complaint should have been dismissed because it failed to allege that the robocalls were received by any Maryland citizen. However, according to the Fourth Circuit, the TCPA does not require the State to "identify particular phone call recipients by name."

Citing no supporting authority, Appellants also argued that the robocall could not have violated the TCPA because it was a single phone call placed to multiple recipients, rather than multiple phone calls made to the same recipients over time; and that they cannot be liable because the Autodialer, and not Appellants, actually placed the offending calls. Again, the Fourth Circuit disagreed, holding that the TCPA's identity disclosure provision applies to "any telephone call" and to individuals using autodialing systems, not just the autodialing services themselves. Additionally, the Fourth Circuit held that the Autodialer was not a necessary party to the lawsuit.

Third, Appellants suggested that the district court erred by denying their motion to stay the proceedings. However, because no indictment had been issued, the Fourth Circuit affirmed the denial. See Ashworth v. Albers Med., Inc., 229 F.R.D. 527, 530 (S.D. W. Va. 2005).

Lastly, although Appellants challenged the district court's grant of summary judgment, the Fourth Circuit held that it had sufficient grounds to establish Appellants' liability under the TCPA. According to the Court, because the facts showed that Appellants created and distributed the robocall, which failed to identify either the message's sponsor or a phone number at which the sponsor could be reached, such facts were sufficient to hold Appellants liable under the TCPA's identity disclosure provision.

Accordingly, the Fourth Circuit affirmed the district court's denial of Appellants' motions to dismiss and to stay the proceedings, and affirmed the district court's grant of the State of Maryland's motion for summary judgment.

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Ralph Wutscher's practice focuses primarily on representing depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, distressed asset buyers and sellers, loss mitigation companies, automobile and other personal property secured lenders and finance companies, credit card and other unsecured lenders, and other consumer financial services providers. He represents the consumer lending industry as a litigator, and as regulatory compliance counsel.

Ralph has substantial experience in defending private consumer finance lawsuits, including cases ranging from large interstate putative class actions to localized single-asset cases, as well as in responding to regulatory investigations and other governmental proceedings. His litigation successes include not only victories at the trial court level, but also on appeal, and in various jurisdictions. He has successfully defended numerous putative class actions asserting violations of a wide range of federal and state consumer protection statutes. He is frequently consulted to assist other law firms in developing or improving litigation strategies in cases filed around the country.

Ralph also has substantial experience in counseling clients regarding their compliance with federal laws, and with state and local laws primarily of the Midwestern United States. For example, he regularly provides assistance in connection with portfolio or program audits, consumer lending disclosure issues, the design and implementation of marketing and advertising campaigns, licensing and reporting issues, compliance with usury laws and other limitations on pricing, compliance with state and local “predatory lending” laws, drafting or obtaining opinion letters on a single- or multi-state basis, interstate branching and loan production office licensing, evaluations and modifications of new or existing products and procedures, debt collection and servicing practices, proper methods of responding to consumer inquiries and furnishing consumer information, as well as proposed or existing arrangements with settlement service providers and other vendors, and the implementation of procedural or other operational changes following developments in the law.

Ralph is a member of the Governing Committee of the Conference on Consumer Finance Law. He is also the immediate past Chair of the Preemption and Federalism Subcommittee for the ABA's Consumer Financial Services Committee. He served on the Law Committee for the former National Home Equity Mortgage Association, and completed two terms as Co-Chair of the Consumer Credit Committee of the Chicago Bar Association.

Ralph received his Juris Doctor from the University of Illinois College of Law, and his undergraduate degree from the University of California at Los Angeles (UCLA). He is a member of the national Mortgage Bankers Association, the American Bankers Association, the Conference on Consumer Finance Law, DBA International, the ACA International Members Attorney Program, as well as the American and Chicago Bar Associations.

Ralph is admitted to practice in Illinois, as well as in the United States Court of Appeals for the Seventh Circuit, the United States District Courts for the Northern and Southern Districts of Illinois, and the United States District Court for the Eastern District of Wisconsin, and has been admitted pro hac vice in various jurisdictions around the country.